Half Of Robinhood's Q2 Revenue Attributed To Crypto Transactions

August 23, 2021 04:00 PM
Crypto Story of the Day

Crypto Story of the Day




Crypto was marginally up this morning while BTC was trading above 50,000. BTC and ETH spot volumes remain below their 30-day average.

Crypto Story of the Day

Investing app Robinhood reported Q2 earnings last week. Crypto made up 50% of transaction-based revenue, up from just 17% in Q1, and the firm guided for lower revenue and net funded accounts for the period ending September 30, 2021.

The platform, which offers commission-free trading, began rolling out crypto trading in 2018. Currently, the company lists that users can trade BTC, BCH, BSV, DOGE, ETH, ETC, and LTC. The app doesn’t allow users to deposit, withdraw, or transfer crypto, as it doesn’t offer wallet services. 

Q2 2021 marks Robinhood's first earnings release since it listed on the Nasdaq July 29, 2021. Revenue came in at USD 565 million, of which crypto trading contributed USD 233 million. Aggregate transaction-based revenue totaled USD 451 million, implying that crypto made up more than half of those revenues, compared to 17% during Q1. 

DOGE trading alone contributed about USD 144 million to revenue, representing a share of 62% of all crypto revenue. During Q1, the company said that DOGE contributed 34% to all crypto revenue. Google search data for “robinhood” shows “dogecoin” dominating related queries. When searching for “robinhood” on Google, 3 of the company’s 6 quick-access links are “Bitcoin,” “Dogecoin,” and “Ethereum.”

Robinhood described crypto activity as a record quarter and stated that over 60% of accounts traded crypto in the quarter. It also marked the first time where a greater share of new accounts placed their first trades in crypto instead of equities. 

As of June 30, the company reported having 22.5 million funded accounts, compared to 9.5 million a year ago. In addition to this metric, the company said it expects monthly active users, assets under control, and revenue to decline in future periods, and that “such declines could be significant.”

Despite putting up a quarter with record trading volume and account signups, the company's stock traded down roughly 10% the day after it reported earnings, likely due to forward-looking statements. Coinbase faced a similar impact in the market the day it reported Q2 earnings, as it guided for lower trading activity and headwinds from “regulatory concerns.”

Given Robinhood's relatively nascent entry into the crypto space and the 1-time nature of some of the activity (such as the interest in DOGE), more context is required to assess the degree to which the revenues are recurring.

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About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote